OMB seeks to clarify 2013 budget guidance

By Kellie Lunney

August 22, 2011

The Office of Management and Budget is looking to clarify last week's memorandum instructing federal agencies to submit fiscal 2013 budget requests that are between 5 percent and 10 percent lower than current discretionary funding levels.

The guidance is aimed at providing options for deficit reduction in light of the recently enacted Budget Control Act, said OMB Director Jack Lew in an Aug. 18 blog post. "This does not mean that we will institute either a 5 percent or a 10 percent cut in an individual agency's budget or in all agency budgets," Lew wrote.

He emphasized that the Obama administration does not want agencies to make across-the-board cuts, but rather to focus on eliminating waste and putting resources into cost-effective programs. "Thus, some agency budgets will decrease (and some more than others), some will stay flat, and some may increase (and, again, some more than others) -- and the same goes for programs within agencies," Lew said.

OMB did not return a request for comment on what, if any, feedback agencies have provided on the memo.

The Obama administration sent an Aug. 17 memo to agencies asking them to outline two budget-cutting scenarios when they devise their 2013 requests, which are due next month. The guidance instructed agencies to plan a 2013 budget that is at least 5 percent below their 2011 spending levels. Agencies also should identify additional savings that would bring their 2013 budget requests to at least 10 percent below their current enacted appropriations, the memo stated.

Such guidance from OMB is not unusual. In a June 2010 memo, then-OMB Director Peter Orszag directed nonsecurity agencies to submit a fiscal 2012 budget request 5 percent below the discretionary total provided for them in the fiscal 2011 budget.

When looking for places to cut, federal managers must step back and consider all the factors driving program and operation costs, including people, real estate and technology, said Janet Hale, a director at Deloitte Consulting LLP. Hale, who worked in government for nearly two decades -- most recently as the first undersecretary for management at the Homeland Security Department -- said various agencies have found significant cost savings over the years, whether through scaling back on long-term technology projects or consolidating redundant programs.

"This is a journey," said Hale, of effectively managing federal budgets and spending. "There are lots of steps along the way. So the actions they [agencies] take in 2011 and '12 are going to set the stage for how well they face the budget pressures of '13, '14 and '15," she said.

Hale said the executive branch and Capitol Hill have to work together to identify savings in federal programs and the most efficient ways to deliver services to American taxpayers. "Agencies are trying to do what's right," but often get caught in the middle of tussles between the administration and Congress, she said.